Jumia shares soar on New York IPO, company now valued at $1.5 billion

Africa’s largest online retailer Jumia’s shares soared more than a third on their first day of trading in New York, as the Africa-focused retailer gained support for its plan to extend online-shopping services across the continent.

The stock traded 34 percent higher at US$19.22 as of 10.43 a.m. local time on Friday, valuing the company at about US$1.5 billion and putting it in so-called unicorn territory. Jumia earlier sold 13.5 million American Depositary Receipts at US$14.50 each, in the middle of a marketing range, raising about US$196 million.

The listing caps 7 years of growth for Jumia, and now has more than 4 million customers in 14 African countries. While the retail platform isn’t profitable, sales jumped by almost 40 percent last year to US$147.3 million.

The Nigerian-based company got early funding from German startup incubator Rocket Internet SE, while its biggest shareholder is MTN Group Ltd., Africa’s largest mobile-phone company. Often tagged Africa’s Amazon.com, it operates in countries the U.S. giant lacks distribution infrastructure and much presence.

Jumia employees rang bells at the same time to mark the listing, according to a statement issued by the company.

According to the BBC’s Africa Business Editor, Larry Madowo, Jumia was not yet profitable and had accumulated losses of nearly US$1 billion since it was founded.

Although there are technical and infrastructure hurdles to growing Africa’s online retail market, he said a big selling point was that Jumia accepted mobile money payments across a continent where few people have credit or debit cards.

However, he said Jumia faced tougher competition. “Its initial public offering coincides with the launch of a competing app from global logistics provider DHL allowing consumers in 11 African countries to buy directly from global retailers.

Jumia’s listing sent an important signal to other African start-ups that a major stock market listing was possible.

Source: Agencies